SAP Thought Leadership

Retail

Retail 2020

A Vision for the Future of Retail

Megatrends are expected to have a very deep and long-lasting impact and mainly cover
societal and technological changes. A megatrend lasts at least a decade. Current
megatrends as identified by analysts and researchers can be grouped in six categories
that have an impact on retail and the areas around retail.

CONTENT

4 Executive Summary
5 Trends and Changing Environments in the Retail Industry
5 Megatrends
5 Trends in Retail
5 Hot Topics
6 Commoditization
6 Effective Management
of the Supply Chain
7 Social Responsibility
7 Asia as the Next Big Hub
7 Long-Tail Retailing
7 Focus on Customer Experience
8 Individualized Service
8 An Integrated View
of the Customer
8 Investment in Services

9 A Day in the Life of a Typical

Retail Customer in 2020
9 Scenario Approach
9 Engagement with Retailers Any
Time, Anywhere, on Any Channel
14 Scenarios Linked to Retail Trends
15 Impact
16 Appendix A
17 Appendix B
17 Living Labs
17 Future Retail Center
18 In Store
18 Retail Management
18 Logistics
18 Customer Engagement
at SAP Research
19 Appendix C

This document contains the content and scenarios from think tank sessions run
by SAP in 2009 and 2010. It provides the basis for the 2010 and 2011 activities
on advancing the scenarios and demonstrations shown in the Future Retail Center
living lab at SAP.
Contributors include representatives from:
SAP Research customer engagement, SAP Research Switzerland,
and SAP Research business development for retail
Industry business unit (IBU) retail, IBU wholesale
Global Trade Hub
Workshop participants, customer representatives, academic groups,
and participants from SAP customer councils

Executive Summary

Future Changes in Shopping Behaviors

Multiple factors influence retailers today. There are global

trends, also called megatrends, such as globalization,
which have a long-term influence on society. For each industry, there are also specific trends, such as customer
centricity, that determine the environment retailers act in.
Besides these trends, there are various forces that affect
the retail market, such as the power of suppliers, new entrants into the market, or substitutes for particular products or services a retailer offers.
A particular driver in the retail industry
comes from the bargaining power of
buyers. The results of several think
tank sessions SAP conducted indicate
that the wishes and demands of buyers
are an increasing force and thus have a
strong influence on what retailers will
offer in the future. Therefore, this document, derived from think tank workshops and literature study, focuses particularly on how the demands and
needs of consumers and buyers will
change in the future.
We outline several scenarios that show
how the shopping behavior of customers will change in the future. The scenarios are presented as a glimpse into a
day in the life of a customer in the year
2020. The selection does not cover the
full range of possible scenarios but
represents key points to stimulate discussion between the SAP Research
organization and the industry, thus influencing the shaping of the solutions
beyond 2015.

SAP Thought Leadership Retail 2020

We close with questions on the relevance and impact of the described scenarios on stakeholders in retail. On the
basis of these discussions, we will create further versions of this document in
which we will address the perspective
of the retailers and the influences on
the retail supply chain in more detail.
We invite you to join our discussions to
evolve this document to its next edition. If you are interested, please contact us.

Trends and Changing Environments in

the Retail Industry
Todays Retail Environment

Megatrends
Figure 1 shows that megatrends are
among the most wide-reaching factors
that influence retailers. Megatrends are
expected to have a very deep and longlasting impact and mainly cover societal
and technological changes. A megatrend lasts at least a decade. Current
megatrends as identified by analysts

and researchers can be grouped in six

categories that have an impact on retail
and the areas around retail. (See
reports 1 and 2 in Appendix A at the
end of this document.)
Figure 2 summarizes these megatrends, and the table gives more details
on what is expected in the different
categories.

The Five Forces That Shape Industry Competition

Megatrends
Rivalry among
existing
competitors

Besides the megatrends, we also find

more retail-specific trends described
by analysts and researchers. (See
sources in Appendix A at the end of
this document.) These are trends that
retailers should address in order to be
successful in the changing environments influenced by the megatrends
listed below.
Hot Topics
Hot sectors in the future include:
Apparel
Personal care
Fast-moving consumer goods
Health
Beauty

Threat of new entrants

Bargaining
power of
suppliers

Trends in Retail

Bargaining
power of
buyers
Retail trends

Threat of substitute
products or services
Adapted from The Five Competitive Forces That Shape Strategy by Michael E. Porter,
Harvard Business Review, January 2008, page 80.
Figure 1: Factors Influencing the Retail Industry

Environment

Globalization

Technology

Society

Consumers

Business

Climate change

Globalization
2.0

Technology
convergence

High
individualization

New political
world order

Ubiquitous
intelligence

Demographic
change and
urbanization

Knowledgebased economy
and business
ecosystem

Cultural
diversity

New patterns
of mobility
Prosperity

Digital lifestyle

Figure 2: Megatrends
Expected to Impact
Retail

New consumption patterns

Acceleration

SAP Thought Leadership Retail 2020

Details on Megatrends
Category
Environment

Globalization

Technology

Society

Consumers

Business

Commoditization
One of the biggest challenges facing
any retailer today is commoditization.
That is, consumers are increasingly
viewing retailers as undifferentiated
from one another except on the basis
of price. This attitude causes intense
price competition and tends to drive
down margins. Only the lowest-cost
leaders in any retail segment can compete primarily on the basis of price; all
others must do something else. The
antidote to commoditization, therefore,
is differentiation through better customer experience and innovation. Such dif-

SAP Thought Leadership Retail 2020

Megatrends
More investment in clean technology
Increasing responsibilities for companies
Shrinking strategic resources
Shift to Asia
Globally competing value systems
Global strategies with local or regional adaptations
Information and nanotechnology as central convergence drivers
Investment in ambient intelligence and cloud computing
Progressive IT revolution (IT continuing to change the world)
Consumption increasing in the form of intangible products such as entertainment, experiences, services, savings, and investment
Much of the value of the tangible products of the future not in production costs, but in
the knowledge behind the product: product development, marketing, distribution, and
so on
Much greater pressure on companies and individuals to be change oriented, creative, and
innovative
Individualism as a global phenomenon
Movement from mass market to micromarkets
Digital lifestyle and virtual business worlds
Sustainable consumption that grows dramatically
Far more daily decisions made by modern people than ever before
Change of paradigm toward open innovation
New value-added networks
Open business and innovation systems, as well as networks and business mash-ups
Need to be change oriented and flexible in adopting new technology

ferentiation must also be well communicated to consumers through strong

branding.
Avoiding commoditization, therefore, is
becoming one of the signal challenges
of our time for global retailers. Those
that differentiate on the basis of something other than price will be the winners
of the future. This will mean, for example, differentiated retail formats, customer experience, product mix, services,
and distribution channels. It may also
mean focusing less on the mass market
and more on niche-oriented markets.

Effective Management of the

Supply Chain
Globalization and reduced trade barriers lead to greater international trade.
Hence, retailers are becoming increasingly concerned about the safety of
their supply chains. The ability to properly monitor supply chains and react
quickly to problems will be a competitive advantage for retailers. Having a
reputation for doing this will likely
enhance the brand equity of retailers.

Social Responsibility
Some consumers appear to be willing
to pay a premium price for products or
services for which there is a discernible
focus on social responsibility. In such
cases, retailers can actually increase
their profit margins by engaging in such
a focus while at the same time performing a service.
Environmental awareness is increasing
rapidly among customers, and to tackle
the ecological challenge, the industry
will move to an approach that centers
on a lifecycle assessment model. Lifecycle assessment can help organizations transform their businesses and
make them more ecologically sound,
while creating cost efficiencies at the
same time. Companies are already
moving in this direction.
Greater environmental awareness will
extend to the customer level. This will
lead the industry to become more
transparent by introducing new
approaches such as energy classification and certification for the retailers
supply chain, similar to those that exist
for cars. This will provide customers
with a picture of how particular companies stack up in terms of sustainability.
Asia as the Next Big Hub
Global consumer growth is shifting
away from the United States. The U.S.
home market will grow more slowly,
and consumer behavior will most likely
be more fickle. Therefore, to achieve
solid growth, U.S. retailers will have to
find other opportunities in other
markets.

Large emerging markets such as India

and China are set to play a much more
significant role in the global economy in
the coming years, serving as the hub
where big business will occur. With a
rapid increase in disposable income,
these emerging markets now have a
sufficiently large middle-class population to support the efficient operations
of a large and sophisticated retailer.
In addition, economic power is moving
from developed to emerging economies. Emerging economies accounted
for nearly 44% of the world GDP in
2007, and such economies are predicted to grow further.1 India, China, and
Middle Eastern economies can provide
strong examples of growth in the next
few years.
As a result, luxury sellers will shift their
focus to aspirational shoppers in
emerging markets such as India and
China. In such markets, the newly affluent are especially brand conscious and
attracted to luxury brands. These shoppers might be easier to attract than
those in developed markets.
Long-Tail Retailing
Within the mass market, retailers and
their suppliers have become highly
focused on price competition, thereby
driving down margins and failing to provide consumers with clearly differentiated offerings. To solve the problem of
low margins, retailers can avoid the
mass market altogether and focus on
niche opportunities, or long-tail
retailing.

Focus on Customer Experience

Todays challenging marketplace
requires retailers to build a renewed
focus on viewing and delivering the
total shopping experience from the customers perspective. Retailers should
shift their focus to offer consumers an
experience that is enjoyable, informative, entertaining, and easy.
Retailers should ensure that they build
customer-centric stores, which are
meant to make the shopping process
easy to understand and to transfer
more control to customers over the
entire retail experience. Customers
must be given access to relevant and
timely information and tools that
improve their shopping experience.
Stores must provide customers with
the services and level of information
needed to make an informed and confident purchase.
Furthermore, retailers should provide
customers with greater control of the
shopping process to drive more efficiency and speed in all customer transactions. Handheld scanners, referred to
as line busters, enable employees to
scan customers purchases and accept
payment away from the traditional
checkout area. Consumers search for
the best shopping experience, of which
the actual purchase is only a small part.
Ambience, other customers, personal
relationships with the salesperson,
personal shopping assistants, or
technology-driven assistance will
become of increasing importance.

1. Global Megatrends 2009, Ernst and Young, 2009.

SAP Thought Leadership Retail 2020

Customers are more and more willing

to share a lot of personal information
with retailers. Retailers ought to make
sure that they use this sensitive information appropriately to enhance the
shopping experience. The shopping
experience must be tailored to different
customer needs and shopping
channels.

cialized for specific target groups.

Todays shoppers are, of course, a
highly differentiated demographic that
promises to become even more so in
the future. Working women, baby
boomers, singles, teenagers, and even
children want products, services, and
shopping experiences that are as distinctive as they are.

can use multiple channels to interact

with the retailer. For example, they could
begin a transaction with a mobile
device, such as taking a picture of a bar
code. They could continue this transaction at home, such as online or with
e-commerce. And they could finish it in
the store by accessing their profile
through in-store Web access.

Individualized Service
Service and in-store experiences continue to break out of the one-size-fits-all
offerings. These experiences are
becoming more individualized and spe-

This demographic differentiation will

increase very rapidly in the future, and
each of these diverse groups will
demand different services and products. Retailers might try to satisfy
these requirements by diversifying,
leading to niche stores and store areas.

Investment in Services
Retailers that can successfully sell services related to their core merchandise
or simply to the strength of their brand
names can increase their growth
through expanded wallet share. Retailers such as Tesco plc., Wal-Mart Stores
Inc., and Best Buy Company Inc. are
already doing this with a lot of success.

An Integrated View of the Customer

The shopping experience needs to be
consistent and seamless across channels, departments within the store, and
customer touch points (such as mobile
e-commerce, call centers, direct mail,
or in-store kiosks). Retailers need to
achieve a foundational level of customer information integration that includes
eliminating customer data silos and
integrating fragmented pieces of data
gathered across all customer touch
points and channels. This level of integration allows retailers to deliver more
seamless shopping experiences and
more relevant offerings to customers.
For instance, integrated customer information allows customers to easily
move between different departments
within a store (for example, a store with
a separate auto service center and retail
section) during a shopping experience.
The stores customer information is
available to every sales clerk in every
department instantaneously. Customers

2. 2016: Future Value Chain, Global Commerce Initiative, Capgemini, and Intel, 2006.
8

SAP Thought Leadership Retail 2020

As suggested by the Global Commerce

Initiative,2 the retail industry will experience a shift toward services and solutions, leading companies to rethink
product development with an emphasis
on these aspects. The outcome of the
consumption experience, rather than
features and functions, will become
more important to the consumer. Retailers and manufacturers that succeed in
this arena will have a greater chance of
achieving lock-in with customers.
The importance of services related to
healthcare and wellness will also grow,
giving both manufacturers and retailers
the potential to transform themselves
into lifestyle providers.

A Day in the Life of a Typical Retail

Customer in 2020
Retail Scenarios of the Future

Scenario Approach
The megatrends we have outlined
above are long term and show where
society and economy are likely to head
in the next 10 years and beyond. However, they describe very high-level
developments without providing con-

crete guidance on how to react to them

as, for instance, an individual retailer.
The retail trends we identified are more
concrete but cover only the challenges
retailers have to face in the next five
years in order to be successful. However, when we look beyond 2015, the
picture becomes vaguer. Therefore, we
Scenarios

Retail trends
Megatrends

Now
Figure 3: Relationship Between Trends and Scenarios

7 a.m.
Breakfast

9 p.m.
Relax

Interactive
television

Basic
household
replenishment

Personal
caretaker

Seamless
shopping

6 p.m.
On the
way home

2020

chose the approach of introducing

selected scenarios that represent different points in the broad space of possible future scenarios (see Figure 3).

Engagement with Retailers Any

Time, Anywhere, on Any Channel
The following story outlines a day in the
life of Suzie, a typical retail customer in
2020. During her day, she interacts
with retailers or services offered by
them several times in different formats.
(See Figure 4 for an overview.) Like
everyone else in 2020, Suzie has a personal mobile device (PMD) that has a
built-in camera, is perennially connected to the Web, and can transfer large
amounts of data.
In addition, Suzies home is equipped
with a digital home terminal (DHT),
which is a device or software capable
of communicating with the smart
objects in the house. The DHT is also
connected to the Internet and Suzies
PMD. The DHT not only manages
Suzies private data about preferred
goods, like and dont like lists, preferred brands, and so on, but also manages a network of preferred personal
retailers Suzie interacts with. Moreover,
it has access to offers and information
from the systems of those retailers.
Lets now follow Suzie during her day.

1 p.m.
Lunch break

Figure 4: Retail 2020 Scenario Suzies Day

SAP Thought Leadership Retail 2020

Wednesday Morning, 7:00 A.M.: Basic Household Replenishment

Story Line

What Happens in the Background

By scanning the refrigerator and the shelves, Suzies DHT has recognized that she is running short of some basic goods she needs
regularly, such as milk, eggs, bread, cheese, tomatoes, and so on.

It is Wednesday morning, 7:00 a.m., and Suzie enters the kitchen

to have breakfast. She starts preparing her muesli with fruits and
yogurt, as well as Japanese tea with honey toast. After opening
her refrigerator, she recognizes she is running low on basics, but a
glimpse on her DHT relieves her: she already has a shopping list.
The DHT wishes Suzie a warm good morning and fully wakes her
up with the first question: Is the upcoming weekend a normal one,
or do you expect some guests? Suzie is happy about the reminder and confirms that she will invite some friends.
The DHT asks Suzie to indicate who is coming and which theme
she will choose for the dinner. Inspired by the great experiences
she had during her last business trip, Suzie decides to use
Japanese Culture and Habits as her theme and outlines in the
DHT her idea for the menu.

The DHT also recognized that the weekend is approaching and that
Suzie might need some additional goods, depending on her plans
(such as inviting some friends for dinner).
The DHT has learned from past shopping carts that Suzie
needs different goods for different friends, depending on their
preferences.
The DHT can use the preferences stored in the internal database and can now take care of the replenishment of Suzies
household.
The DHT calculates the different options and determines that one
of Suzies preferred retailers has a special promotion this week. In
addition, the DHT scans the personalized offers several retailers
have for Suzie on the basis of the past shopping carts she has
placed with them. Finally, it selects the best option of retailer based
on Suzies preferences. However, this would require that she
change her plans for the menu.
Thus, the DHT orders the groceries and has them delivered to
Suzies house so that she is prepared for her friends visit.

While Suzie is having breakfast, she thinks about the theme for the
little get-together and the activities she will organize for her friends.

The DHT proposes to slightly switch plans for the menu by replacing sushi with ramen, as ramen soup is currently on sale, and displays the price list to Suzie. She likes the idea. Knowing that some
of her friends are not so adventurous with food, the soup might be
the better fit anyway, and thus she confirms the plan on the DHT.
Finally, Suzie can specify if she wants to get the food delivered or
if she is passing by a pickup station. Because she has a very busy
schedule and needs goods from several retailers, she decides for
convenient and sustainable home delivery.

1. The digital home terminal (DHT) interacts with Suzie to learn about her plans
for the weekend.

2. The DHT retrieves data from the retailers to calculate the best offer.
DHT

4. The DHT orders the goods.

3. The DHT proposes a changed menu.

Suzie at home

5. The groceries are delivered

directly to Suzies home.
Grocery store

10

SAP Thought Leadership Retail 2020

Figure 5: Scenario
for Basic Household
Replenishment

Wednesday 1:00 P.M.: Seamless Shopping

Story Line
After a busy morning in the office, Suzie goes to town for a lunch
break. While walking around, she comes across a music system for
which she has been searching for quite some time. She goes into
the store. She really likes the system, but the color offered does
not match her furniture; some customization is needed. Thus, Suzie
orders the system in her favorite color directly in the store and gets it
delivered to a pickup location close to her home so that she does not
have to carry it around.
While surfing through her favorite social networking site the evening
before, Suzie had found some nice virtual shoes on her friends profile page. She liked them so much that she bought the same pair of
virtual shoes right away and put them up on her profile. After having
looked into her online wardrobe which is a representation of her
real wardrobe Suzie had decided that she also wants to have this
pair of shoes physically. However, she would never buy shoes without trying them on. Thus, she had visited the online store of the shoe
retailer in her social network to figure out which stores in her town
have the shoes available in her size.
Now that Suzie still has some time left before her next appointment, she selects the store that is on her way to the train station.
Suzie goes to the store, tries on the shoes, buys them, and has
them delivered through the retailers online store directly to her
home.

While traveling to her next appointment by train, Suzie sees an

interesting advertisement on the in-train information display about a
big discount on a certain perfume. This perfume is one of her favorites; thus, she wants to be reminded of the discount and takes
a photo with the camera of her PMD.
The PMD notifies Suzie about a perfume store at her destination
and presents her with the one-click buy application. Suzie does not
want to miss the opportunity and immediately buys the perfume.
After successfully finishing her meeting, Suzie is automatically
guided to the pickup store by her PMD to collect the perfume.
Because the store is rather big, it has installed a screen-based
system to guide customers through the store so that they easily
find what they want. The screen at the entrance welcomes Suzie
and shows her the way to the pickup counter. Since it is around
a corner, another display placed just before the counter shows
an additional message for Suzie to ensure that she does not turn
in the wrong direction.
When Suzie leaves the store, she receives a new message
on her PMD with a voucher for coffee that she can use in the
stores coffee bar during her next visit.

What Happens in the Background

The retailer orders the system and has it delivered to a store close to
Suzies house. She can pick it up on Thursday so that she can set it
up just in time for her friends visit on Friday.

This purchase is registered in Suzies account that connects her

online and real-world purchases at the retailer.
The retailer has all that information in its back-end system. The retailer determines the appropriate stores and sends them to Suzies
PMD.

Because the retailer has sent detailed address information, Suzie

can use the navigation function of her PMD.
The information about the purchase is automatically updated in
Suzies customer record. This triggers a special message to Suzie:
because she has made three real-world purchases triggered by
a virtual purchase, she will receive a special discount on her next
purchase in the social network store.
The PMD automatically starts searching for details about this
advertisement. It determines that there is a possible pickup store
at the destination of Suzies train ride.
The application transfers the order to the back-end system and
reserves one bottle for Suzie in the pickup store.

The screen at the entrance communicates with Suzies PMD via

wireless LAN when she enters the store.
When registering the pickup of the perfume, the back-end system
realized that Suzie regularly comes to the store to pick up her purchases. The store manager had just set up a special promotion for
these customers.

SAP Thought Leadership Retail 2020

11

Figure 6: Scenario for

Seamless Shopping

Perfume
online
store

Bricks-and-mortar perfume store

7. While traveling on the train,
Suzie captures an ad for a
promotion through her personal mobile device (PMD),
visits the online store, and
buys the perfume.

Music store

8. Suzie picks up the reserved

perfume in the next store on
her way back to the office.

4. Suzie visits the retailers online store on the social network

and gets information about
where to buy real shoes.

Suzie in transit

5. Suzie visits the physical

store, tries on the shoes, and
buys them.

Wednesday 6:00 P.M.: Personal Caretaker

Story Line
Suzie receives a message from her DHT via her PMD: Suzie, there
is a promotion at your favorite winery. I checked the stock and you
are running short on some varieties.

The reminder comes just in time for Suzie as she had wanted to
make a note to think about the wine for the dinner on Friday. So she
asks the DHT for more information on the available wine.

Suzie checks the list and confirms with her PMD that she will stop at
the winery when going home.

12

SAP Thought Leadership Retail 2020

2. The customized system is directly delivered to a pickup

store close to her home.
3. Suzie buys virtual shoes on
her social network.

6. The shoes are delivered to

her home.

Shoe store

1. Suzie finds a music system

she has wanted and tries it out.

Suzies social network

What Happens in the Background

While Suzie has been in the office, her DHT has received some information about a special promotion from a winery that is on Suzies
route back home. The DHT knows that this winery is one of Suzies
favorites and that she likes to offer wine from there to friends. It
checks Suzies stock of these wines and determines that she is running short.
The DHT knows from Suzies past shopping carts how much wine of
which type she typically buys and has already checked with the winery that enough bottles are available. The DHT informs Suzie about
those wines that she actually will be able to buy and provides some
out-of-stock information for the others.
To make sure that the winery is still open when Suzie comes, the
DHT sends a message to the winery to confirm Suzies visit later
that evening.

1. The DHT receives a special promotion

from the winery.

Suzies Home

Figure 7: Scenario for

Personal Caretaker

2. The DHT checks the stock of wine at

Suzies home.
4. The DHT informs Suzie about the promotion, the stock at home, and the available wines at the winery.

3. The DHT confirms availability of

Suzies preferred wine with the winery.
6. The DHT confirms Suzies visit.
DHT

Wine store

Wednesday Evening 9:00 P.M.: Interactive Television

Story Line
After a busy day, Suzie is relaxing a bit and watches a movie on TV,
which is part of her DHT. She loves the dress worn by an actress in
the movie. She bookmarks the dress using her remote control and
continues watching the movie.
Suzie receives several special offers combining the dress and a pair
of fashionable shoes in a bundle at a certain discount.

Before actually selecting an offer, Suzie uses her social network

to learn more about the dress and the shoes as well as the retailers offering the special package. Then she moves on to her social
network to review recommendations and visit the stores from the
retailers on the social networks.
While surfing through the stores, Suzie also compares the digital
product memory of the different products. With this, she can learn
where a product has been produced, if ethical standards are met
during production (for example, if sufficient wages are paid), if sustainably produced raw material has been used, and more.
After having scrolled through all the information, Suzie decides to use
a store that has a good reputation for taking customer complaints seriously and addressing them in very short time. She is so convinced
by the recommendations given that she directly orders the fashion
bundle online.

5. Suzie confirms via PMD that she will

stop at the winery.

Suzie in transit

What Happens in the Background

The interactive television connects to the network of retailers on the
Internet and in Suzies social network. The DHT searches for that
dress in the retailer network and collects all information about it, such
as price, availability, promotional offers, discounts, and so on.
Some retailers offer a special service: triggered by the search query
to the online store, they automatically check Suzies past orders or
real-world purchases. They see that that she is always open to recommendations for shoes that go well with a dress.
These stores are similar to online stores, but they have a much
more real-world-like interface and are much easier to use than
Second Life. As these stores are directly integrated in social
networks, Suzie also directly gets information about how well
or poorly individual retailers handle complaints from customers.
The digital product memory is attached to each product in the
form of a radio frequency identification tag and a related repository, and it stores information about the product and its history.
Data is collected continuously throughout the product lifecycle.
The DHT places the order, and Suzies virtual wardrobe is directly
filled with the new dress as well as the shoes.

SAP Thought Leadership Retail 2020

13

Social and
online retailer
networks

4. Retailers provide special

offers based on Suzies wishes.
5. Suzie selects the items
based on social network information and orders the dress
and shoes.
Suzie at home

3. The interactive television

searches for the dress and
matching shoes in the online
stores of retailers.

DHT

1. Suzie is watching a movie on

TV and loves the dress worn by
the actress.
2. She bookmarks the dress
using her remote control.

Figure 8: Scenario for Interactive TV

Scenarios Linked to Retail Trends

We have assumed that the different
scenarios describing the interaction of
consumers with retailers in the future
have different time lines to become
reality. Aligning the scenarios with the

retail trends we have identified shows

that each scenario covers multiple
trends (see Figure 9). Thus, examining
one scenario in detail already allows
building up organizational and technical
structures that will easily support additional scenarios in the future.
Retail trends

Commoditization

Applicability of
retail trends

Effective management of the

supply chain

Low Medium High

Social responsibility
Long-tail retailing
Focus on customer experience
Individualized services
Retail investment in services
7:00 a.m.
Basic household
replenishment

1:00 p.m.
Seamless
shopping

Figure 9: Scenarios and Their Coverage of Retail Trends

14

Hot sectors

SAP Thought Leadership Retail 2020

6:00 p.m.
Personal
caretaker

9:00 p.m.
Interactive
TV

Integrated view of the

customer

Impact

Questions for Stakeholders

Stakeholders in Retail
What are the implications for the supply chain? Are you prepared to sell not only from the
store but also from different places in the value chain? Are you ready for vertical integration?
How well do you know your customers?
How much information can you currently provide about the products you are selling and the
value-adding services available around them? In which format is this information available?
Is your network established well enough to work with other service providers to provide
new, value-adding services to your customer?
Do you act in ways today that are similar to scenarios for 2020, already helping others in the
supply chain and offering a joint service?
Have you thought about how your services could help to reduce carbon impact and improve
sustainability?
How would you organize billing, payment, transportation, and so on in a network of retailers
serving the customer?
How far can customization go?
Would your customer trust you enough to host his or her data and act as a personal
assistant?
Do you as a shop owner share your own experiences to make the best recommendation to
your customer?
Who may become your biggest competitor in these scenarios? Will you prefer partnering
with the other stakeholders?
Could you establish yourself as the trusted retailer for the customers? Could you offer a
service complementing the digital home terminal sitting in each customers home that
manages a customers inventory, informs customers in time with special promotions, and
so on?

Here are some questions to stimulate

discussion of the impact of the scenar
ios on your personal life as a consumer
and your business as a retailer. The
questions are grouped along the four
main roles involved in the scenarios
described above:
Stakeholders in retail (retailers,
wholesalers, service providers,
producers, and logistics providers)
Customers
Digital home equipment providers
Government

Customers
How much information do you want to share with you retailer?
How far can customization go?
How can your usage of the services outlined in the 2020 scenarios help reduce carbon impact and improve sustainability?
Would a voice interface be the right channel with which to communicate?
Do you as a customer want service providers in retail to share their experiences with you?
What would encourage you to use a digital home terminal and personal mobile device?
To what extent would you use the two devices?
Digital Home Equipment Providers
Could you provide a device or application to strengthen customer loyalty?
Would a voice interface be the right channel with which to communicate?
Government
What do import and export regulations have to look like to enable 2020 scenario services
cross-border?
What privacy regulations need to be followed?

SAP Thought Leadership Retail 2020

15

Appendix A
Literature

2016: The Future Value Chain; Global

Commerce Initiative, Capgemini, and
Intel; 2006.
www.hr.capgemini.com/m/hr/tl/2016
_The_Future_Value_Chain.pdf.
Daheim, Cornelia, Six Key Trends
Shaping Future Society. Z_Punkt
GmbH. The Foresight Company. Paris:
OECD: TIP Workshop on Future
Orientations for STI Policy, December
14, 2009. www.slideshare.net
/whatidiscover/six-key-trends
-shaping-future-society.

Global Megatrends 2009,

Ernst & Young, 2009.
www.eycom.ch/publications
/items/2009_global_megatrends
/2009_EY_global_megatrends.pdf.

16

SAP Thought Leadership Retail 2020

Kalish, Ira, Global Powers of Retailing

2010, Deloitte Touche Tohmatsu
Limited. 2008.
www.deloitte.com/assets/Dcom-Global
/Local%20Assets/Documents
/Consumer%20Business/dtt
_globalpowersofretailing2010.pdf.
Larsen, Gitte, Why Megatrends
Matter, Copenhagen Institute for
Futures Studies, November 20, 2006.
www.cifs.dk/scripts/artikel
.asp?id=1469.
Porter, Michael E., The Five
Competitive Forces That Shape
Strategy, Harvard Business Review,
January 2008: 80.
Rebollo, Juan Manuel, Retail in 2020,
Accenture. 2008.
www.accenture.com/NR/rdonlyres
/87168DA4-312A-4B88-BF10
-368A6EA8EE91/0
/SpanischVisionv1b.pdf.

Appendix B

SAP Research

The SAP Research organization is the

global technology research unit of SAP,
with a network of 13 research centers
on five continents. The group significantly contributes to the product portfolio of SAP and extends its leading
position in the market by identifying and
shaping emerging IT trends and generating breakthrough technologies
through applied research. Visit
www.sap.com/research.
Research: In contrast to SAP product
groups and development labs that work
on new functions and releases, the
researchers explore opportunities that
havent yet been developed into
products.
Co-innovation: The business model of
SAP Research is based on co-innovation
through collaborative research. In collaboration with leading universities,
partners, customers, and SAP product
groups, SAP Research drives the
development of promising ideas and
prototypes into market-ready software
for maximum customer value. To that
end, customers are involved early in
the research process through special
lighthouse projects. Meanwhile, dedicated living labs demonstrate technological research in real-world settings
turning prospective SAP solutions into
tangible experiences.

closely involved throughout the

research and development process of
new products and services.
Driving the concept of living labs as
collaboration platforms for open innovation, SAP Research has been successful in bringing together customers, partners, SAP researchers, and developers
for in-depth collaboration and discussions on various current topics. The
concept involves demonstrating technological research in real-world
settings.
The motto SAP to touch and explore
best describes these efforts. SAP
Research so far has developed three
living lab locations in Germany and
Switzerland, and it applies the living lab
methodology to the field of emerging
economies in South Africa. Visit
www.sap.com/about/company
/research/livinglabs/index.epx.

The Future Retail Center is divided into

three scenarios (see Figure 10), grouping distinct and unique demonstrations
under broader topics.

Future Retail Center

The Future Retail Center, located in
Regensdorf, Switzerland, and managed
by SAP Research Switzerland, is a joint
effort between SAP Research and
Figure 10: Scenarios
of the Future Retail
Center

Living Labs
Since 2001, the European Union has
been supporting a new paradigm for
technological research: the living labs.
This concept is designed to boost open
innovation by ensuring that all relevant
stakeholders, including end users, are

industrial and academic partner organizations. It is designed to foster

research and development in retail,
trade, and logistics. One major goal of
the Future Retail Center is to show new
ways to improve the customer experience while optimizing in-store processes with intelligent deployment of IT and
SAP software. Radio frequency identification (RFID), sensor-based systems,
mobile technologies, and other information and communication technologies
enable the complete visibility and traceability of handling units along the supply chain. You can use these systems
and technologies to automate and optimize support for end-to-end processes,
generating a tremendous benefit for
businesses and consumers.

Retail management

In store

Logistics

SAP Thought Leadership Retail 2020

17

In Store
We ask the following questions when
addressing the in-store scenario:
How do you improve customer centricity by leveraging mobile devices,
such as for store navigation and
checkout?
How do you support customers buying decisions through product information via mobile phones?
How do you automate monitoring and
replenishment processes?
Retail Management
In retail management, these are our
concerns:
How do you implement strategic
decisions on policies such as prices?
How and what do you need to learn
about customer behavior?
How do you improve in-store processes based on data collected in
and around the store?
Logistics
For the logistics scenario, we consider
these questions:
How do you optimize processes
along the supply chain by leveraging
RFID, sensors, and bar codes?
How do you ensure quality standards
for products from the producer to the
consumer?

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SAP Thought Leadership Retail 2020

Customer Engagement at SAP

Research
Customer Engagement is a newly
founded unit within SAP Research,
which explores and implements new
means and models of co-innovation
with SAP customers, users, and the
SAP field organization. Customer
Engagement enforces close alignment
between future customer business,
research agendas, and product and
solution road maps. This lays the foundation for a new and very important
instrument in our future SAP Research
organization and thus is another key
influencer for SAPs future business.
The first major result is the mature and
sustainable concept for living labs. The
creativity workshops with the diverse
customer and consumer communities
are a first new means of dialogue
between customers, SAP Research,
and the SAP field organization.

Appendix C

Objectives and Approach:

Intentions of This Document

This document is intended to:

Be provided to SAP external and
internal audiences and become a
base for interesting discussions
Be used to contribute to a sustainable development of the Future Retail
Center3 living lab and thus help generate new demonstration ideas
Stimulate new research questions
and projects and closer involvement
of customers, partners, and solution
management in those activities
In order to create new ideas and perspectives for the living labs, the following ideas guided the creation of this
document:
To jointly craft it with persons directly
concerned, such as wholesalers,
retailers, consumers, and so on
To base it on the think tank
methodology
To derive the document and its iterations from these think tank sessions
run in various workshops with diverse
customer communities
We chose these guidelines rather than
assigning a market research organization, analysts, or others and rather than
running a sponsored academic
research project.

3. The Future Retail Center, located in Regensdorf, Switzerland, and managed by SAP Research Switzerland, is a joint effort between SAP Research and
industrial and academic partners to foster research and development in retail, trade, and logistics. It is a living lab in which we demonstrate research results and prototypes to customers and interested visitors within a semi-real-life environment, trigger new research questions, and meet to discuss issues
in-depth in topic-specific creativity workshops helping to shape our joint visions.
SAP Thought Leadership Retail 2020

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